CFO Message

By means of our three main pillar businesses—real estate, energy, and asset management—we will aim for further growth while realizing stable returns to shareholders.

Review of FY2022 and Revision of the Medium-Term Management Plan

From the perspectives of profitability, the clarification of business responsibilities, and the effective utilization of management resources, the MIRARTH HOLDINGS Group reorganized its businesses into four segments in April 2022. In October 2022, we transitioned to a holdings structure and are aiming for new growth by innovating our business structure. Looking at business results for fiscal 2022, the fiscal year ended March 31, 2023 on a consolidated, year- on-year basis, net sales decreased 5.7%, to 153,472 mil- lion yen; operating income declined 40.8%, to 7,030 million yen; ordinary income dropped 50.9%, to 5,033 million yen; and net income attributable to owners of parent fell 26.2%, to 4,584 million yen. Although gross profit in our real estate business exceeded plans due to the strong progress in sales, revenue and earnings decreased in the energy and asset management businesses due to the impact of the TOB for Takara Leben Infrastructure Fund, Inc.
　As there was a major change in the earnings structure in the energy business following the implementation of the TOB due to the postponement of a planned sale of power generation facilities and the initial costs incurred by the TOB, we changed the quantitative goals of the Medium-Term Management Plan in May 2023. As far as key management indicators are concerned, the revised equity ratio is 20% or more (for fiscal 2024), the interest-bearing debt ratio (LTV) is less than 65%, and the D/E ratio is less than 3.0 times. ROE remains unchanged at 13% or more. Due to the effects of the TOB, the equity ratio was 18% and ROE was 7.6% this term, but I believe that we can achieve our goals by growing our energy business and increasing profits. Excluding the amount from the TOB’s impact, ROE would be 10.1%.
　Turning to the performance forecast for fiscal 2023, the real estate business is progressing well despite the TOB’s impact, and thus net income is expected to be in line with the original plan. In contrast, in the case of the performance forecast for fiscal 2024, each level of profit is expected to exceed the initial plan, as the energy business will by then have moved into a phase of stable earnings.

Financial Position

Logic Tree

Promotion of Strategies toward Achievement of Medium-Term Management Plan Targets

Promoting investment in the energy business

Originally, the real estate business of the MIRARTH HOLDINGS Group accounted for 90% of its operating income. To escape from a situation of high exposure to the real estate market, we will proceed with investments in the energy business as our second pillar while making the real estate business our core business.
　Amid calls for efforts to mitigate the effects of global warming, many listed companies have adopted CO 2 reduction targets and are aiming to become carbon neutral. With regard to the Company’s energy business to date, as we have been generating revenue by developing and selling power plants, high volatility has remained an issue. From now on, aiming for stable profits with the increasing demand for renewable energy providing added impetus, we will move forward with the transition from being a flow business centered on facility sales to a stock business based on electricity sales revenue by owning power plants as assets. In fiscal 2029, we aim to have the energy busi- ness account for 30% of our operating income, with an EBITDA ratio of 1:1 between the real estate business and the energy business.
　Not relying on the feed-in tariff (FIT) system, the solar power generation business in the MIRARTH HOLDINGS Group is promoting off-site corporate power purchase agreements (PPAs). Based on conditions as they currently stand, the Company has already entered into business partnership agreements with Sumitomo Mitsui Banking Corporation, Osaka Gas Co., Ltd., SMFL MIRAI Partners Co., Ltd., and TEPCO Energy Partner, Inc. and received business partnership offers from many other companies. The already burgeoning demand for renewable energy is increasing, but we are conducting simulations on the assumption that electricity sales prices will fall due to factors such as the restart of nuclear power plants.

Aiming for stable growth in real estate business

The MIRARTH HOLDINGS Group regards improving its asset turnover and creating a leaner balance sheet as its most important issue. Working to further expand, with the aim of stable growth particularly in its core real estate busi- ness, the Company is expanding urban redevelopment projects and quality building maintenance projects through- out Japan. Additionally, we have established a local sub- sidiary in Bangkok, Thailand, and are actively promoting the condominium business in that country.
　In the new built-for-sale condominium business, sales prices are on the rise, but so are construction costs, and thus we are basically forming plans for a gross profit margin of 20-22%. As far as the liquidation business is concerned, while monitoring rising costs, the Investment Development Business Headquarters conducts purchases that take into consideration the internal rate of return (IRR) and cap rate.
　In addition to J-REITs, for which we are the main spon- sor, we will continue to expand the scale of private fund asset management.

Measures to Improve Corporate Value

Use of sustainability finance

The MIRARTH HOLDINGS Group engaged in the procure- ment of funds and utilizes green loans through sustainabil- ity finance, which evaluates ESG initiatives, information disclosure, contributions to achieving the SDGs, and other factors. With the aim of expanding the positive impact and mitigating the negative impact of its corporate activities, the Company raised funds by means of positive impact finance. To express our intention to contribute to the achievement of sustainability strategies through our busi- ness activities, Leben Clean Energy, which is responsible for the energy business division of our Group, obtained a second opinion from Rating and Investment Information, Inc. (R&I) while also concluding a financing agreement for a sustainability-linked loan in December 2022 as part of its fund procurement activities. The funds raised will be used as business funds for renewable energy development and other initiatives.

Investment in human capital

Having established a new human resources system at Takara Leben, our main subsidiary, in 2019, we are pro- moting a system that will consistently create the human resources necessary to achieve our management plans. In addition to increasing salaries by an average of 7%, we have adopted measures that include shortening working hours in an effort to retain human resources. As expertise in devel- opment and purchasing leads to the accumulation of intel- lectual capital, human resources development and retention is an ongoing challenge in all three businesses of the MIRARTH HOLDINGS Group. At the same time, we are actively recruiting mid-career personnel who possess new areas of knowledge and are working to diversify our workforce. Currently, the percentage of female managers stands at 11.0%. We would like to increase this to 20% by working to create workplace environments in which employees can continue working for a long time.。

Stock Price Performance (TSR)

March 31, 2013 as the basis for TSR